Bank branches: a secret weapon in the digital war

By :Martin Shires

June 30, 2015 08:30 AM

Bank branches need to be better utilized as a key differentiator between traditional institutions and non-banks that are primarily digitally-focused.

While the likes of Google, Facebook, Amazon and Apple are cash-rich, they lack the kind of physical presence that a branch network offers more traditional financial services firms. It comes back to the idea of whether a digital-only bank is the future? The answer seems to be that consumers like the personal and emotional connection they get from dealing with real people.

As Santander boss Ana Botin points out, the branch is vital to marking out banks ahead of their competitors for many of those important - and high-value - life events.

“You are not going to get married through technology. You are not going to buy a house through technology,” she told the Financial Times, adding that the goal is to “find a model that combines the personal side with the technology.” Even young adults demand a branch presence, visiting at least twice a year.

Digital is just one part of the equation for banks, but far from the only thing. We see regularly how omnichannel consumers - those who use both online and physical channels - are more loyal customers. Botin also points out that digital customers are 2.6 times more valuable to banks than those only heading into branches or using the telephone.

“I think of digital as a means to an end: How do I service and get more loyal customers: how do I achieve operational excellence and how do I change my culture?” says Botin.

But it’s hard to ignore the statistics: banks are closing increasing numbers of branches in developed markets such as the US and UK. So what’s in store for the branches that are left? The message is that cutting an institution’s physical footprint alone is not necessarily a bad thing, nor is enough in itself just to reduce overhead costs. Without increasing the efficiency and profitability of those branches that are left it will be potentially damaging just to close them down and focus on online and mobile exclusively.

FI’s have forgotten one important thing in “Branch Transformation” – were they managing sales & relationship staff effectively in the first place? When you dig under the covers of a ‘loss making branch network’ inevitably branches will be found with high footfall which are not meeting sales targets, and conversely branches with low footfall have long since adapted to using the telephone to successfully manage customer relationships and over-drive high revenue.

The answer is give the customer choice, but at the same time re-engineer staff performance management to a level of consistency which exists in the best managed outlets today, using technology that helps this be sustained tomorrow.

As Botin points out, the branch is a bank’s secret weapon; its power needs to be carefully harnessed.

Martin Shires is a global evangelist for branch transformation strategy, based out of NCR’s R&D center in Dundee, UK. Martin has held a number of senior regional management roles in European retail banking.